Environment Committee on Nov. 27th, 2018

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

You talked about a role for government. You mentioned the fall economic statement. How is the federal government spurring innovation in the agricultural sector right now and, moving forward, in what ways could the federal government better assist, be it research or funding to help your sector transition to a clean low-carbon economy?

[Prof. Mike Moffatt]

I think there are a number of things the federal government is doing. I was chief innovation fellow for the Government of Canada back in 2017. I am, I suppose, promoting my own work a little bit when I talk about the economic tables and superclusters.

I'll focus more on going forward. I think there are a few things we can do. The big one is research and development again. I see the community colleges playing a huge role here, with pilot projects and those kinds of things to develop new technology.

I think in the fall economic update, we had the 100% capital cost allowance for green technologies, and there was a list of green technologies. At Smart Prosperity, we are fans of that, but we would also like to see that list expanded. There are some green technologies that don't fit under that category. That would be something moving forward for budget 2019.

I think overall I agree with the path that it's about research and development and it's about clustering, having a number of firms working together all tackling these big challenges.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Susie, there's a bit of time left.

Perhaps you want to chime in on that topic, or I could ask you a separate question.

[Susie Miller]

I'd like to chime in on this one, because I think it's really important to have a science-based regulatory system that is predictable. It doesn't matter if it's a piece of equipment or a pesticide or a new feed. We need to be able to go and get approvals in order to be able to advance that innovation.

Also, we need to be able to measure. I know surveys and data are not particularly the top-of-mind products, but if we don't know how we're doing, how can we do better?

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Susie, could you also touch base on what Mike and I talked about with the issue versus the better economic return? You talked about no tilling. It was fascinating. I hadn't heard about this. There is less labour cost, of course, because you don't have machines and people out there doing that.

You have the ability of increasing productivity, but also increasing profits in many ways in the grain sector as well.

[Susie Miller]

My experience has been that incentives will only work as long as they're consistent and they're paid forever. If you want to make fundamental change in decision-making, it has to make economic sense first.

[The Chair]

Thank you.

Monsieur Godin.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Thank you, Chair.

I'm glad you're...

[The Chair]

We'll pause for just a second while people put on their earpieces.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

It's usual for me.

The members respect two languages here. It's very important. I appreciate it.

[The Chair]

We're good to proceed.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

I'm glad you're with us this afternoon. Your testimony makes me really happy. This is good news, indeed.

You've both talked about good practices. There is technology that allows us to do environmentally-friendly sustainable development while taking economic performance into account. For a number of years, we've been taking measures to develop our knowledge, which is a credit to Canadians. Mr. Moffatt made a comment that I quite liked. He said that instead of importing technologies, we should keep our knowledge and export our green technology as well as our innovations in the field of sustainable development.

I read good news on the Smart Prosperity website. I want to mention it because I feel that it is important to see every positive thing that is done for the environment. We're not only just discovering that environment matters, and it is not true that nothing was done in the past. Various governments implemented measures. The previous government was conservative, and its predecessor was liberal. All partisanship aside, I am happy to see really concrete results. In the Conservative Party, we've been labelled anti-environment. Whenever I can, I say that it's not true that Conservatives get up every morning to destroy our planet.

I read the following headlines on the Smart Prosperity website: “Meet an oil sands project that will capture and store 1M tonnes of carbon in the ground every year”; “Turning manure into renewable fuel”; “Neighbourhoods that blend in with nature”; “Fabricating metals the carbon neutral way”; “Fuelling more sustainable air travel — A mustard-based biofuel that will revolutionize your next flight”; and “Storing energy locally”.

This last article talks about Sigma, an energy storage business which was created in 2011. This company has done a lot of research and development, and has managed to develop interesting technologies. As was mentioned earlier by Mr. Moffatt, the government should provide financial support to these companies so they can go further and faster.

Today, there are solutions. I recently met representatives from Coca-Cola who showed me that they take very active measures in that sense. Companies are increasingly more aware of this reality. This didn't happen by magic these past three years. They have been aware for years, and they area implementing measures to protect our environment.

My question is simple. Given all technological advances that have been made to this day, is the carbon tax really necessary? I'm inviting you both to answer this question.

[Susie Miller]

I can't answer that question. I don't have enough knowledge. I'm sorry.

[Prof. Mike Moffatt]

I would say that, in many cases, the carbon tax is the most cost-effective way of doing that. Does that necessarily mean it's necessary? Well, no. We could find other ways of accomplishing that, but those ways, in some instances, will be more expensive.

I would say, with agriculture—because again, I'm here to talk about agriculture—that carbon pricing only takes you so far. In this sector, I would not limit greenhouse gas policy simply to carbon tax for a variety of reasons.

First of all, you're looking at a lot of non-point source emissions. The emissions aren't always easy to measure. Second, as we've seen in a few other sectors, for the most part, this tends to be a low-margin sector that is highly susceptible to international competition, so then you have to start worrying about carbon leakage. Third, there is a real role for innovation to play, as you state. There is a role here for government to do things like pilot projects, to look at projects that help farmers purchase this new technology and so on.

So while I do think that the carbon tax is useful in many instances, I do not believe, and we do not believe, that the carbon tax is necessarily a one-size-fits-all solution and that, to meet our Paris commitment for greenhouse gas, we are going to need a wide array of policy instruments.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Thank you very much.

Ms. Miller, I'm glad to know that you're unable to answer this question. You're more specialized than I am in environmental issues, yet you're not able to answer this question either. I appreciate your honesty, it's really remarkable. I can't answer either, but I have great doubts regarding the carbon tax.

I see that time is running out.

On an unrelated note, on which years are based the numbers in your table regarding greenhouse gas emission reductions, that is, 43% for canola and 60% for wheat?

[Susie Miller]

These numbers are from 2014, and the study was completed in 2017.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Thank you. You're very articulate.

[The Chair]

Next, we'll have Mr. Bossio.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Thank you both so much for being here today. It's greatly appreciated, and your testimony is really beneficial and helpful.

I'd like to follow up on Monsieur Godin's line of questioning. I guess, up until now, we've used a variety of regulatory and policy measures to try to reduce our greenhouse gas emissions. Has that been successful? Do you feel that's been successful so far?

[Prof. Mike Moffatt]

I believe so, though there are questions, obviously, of stringency.

Clearly, we haven't met our previous commitments, so there is more work to be done. I do think that carbon pricing can help reduce emissions in the most cost-effective manner in many industries. It does work best when you don't have as much concern about carbon leakage, about this competition effect, and you're dealing with either point sources or fuels where you can accurately measure the emissions.

For something like agriculture, it's a different set of conditions. It requires a different set of policy instruments, which, as you point out, governments have used. Governments have never used a one-size-fits-all approach to emissions, and I think they should continue to use and utilize a wide variety of policy instruments.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

To follow up on that, we look at the regulatory environment or the policy measures that could be taken to benefit, and I think that, as a government, we've recognized that you need to use a broad range, a broad basket, of different policy measures in order to achieve our targets, but it has shown, as you said, that the regulatory side is far more expensive.

Would you agree that it doesn't send as clear a signal to the market of the intention of meeting our targets around climate change and GHG emissions?

[Prof. Mike Moffatt]

I agree, and I would go further. The risk that governments run in using those instruments is that they're picking winners and losers, in many ways, by setting those performance standards or those technology standards. It's essentially, “You do this; you don't do this”. In some sense, it's almost taking a “government knows best” approach. Ideally you would want to let the market figure out where it's cheapest to cut those emissions. So yes, I would say in many instances—in most instances—the best bang for the buck is going to be through carbon pricing.

That is not to suggest it's appropriate in all cases, again, because there are going to be exceptions depending on the industry and depending on the nature of those emissions.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

<Would you not agree, then—and Ms. Miller, I think you can probably jump in on this—in taking that exact view with agriculture, with the federal backstop, which will apply to Saskatchewan, Manitoba, Ontario and New Brunswick, that farm fuel use is exempt for that reason? It is an industry, a sector, that today doesn't have the technology to replace or to eliminate the use of fossil fuels in its production or completely its greenhouse gas emissions, and as we know with animals, we can start working toward reducing those emissions, but we're not there yet. We need time to adapt for that sector, to adapt and develop those technologies. Maybe you can expand on that and the types of technology you think are going to lead us there.

[Susie Miller]

I'd like to use two examples of where government instruments have helped or not contributed. One is on the adoption of this technology we talked about, the zero till. Essentially there was very little federal government investment. It was provincial government investment that got it going, but there were no incentives provided and there was no punishment, I guess, for not adopting that technology. It led significantly to the reduction of greenhouse gas, but it was not for that intention.

The other was the biofuels industry. The biofuels industry had a lot of investment by producers and local communities, but it was only because government was there at the same time in terms of taxation. That industry would not not have developed without that and the mandated minimum fuel.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Mr. Moffatt.